A Federal Reserve Board policy that freed financial institutions to lend to affiliates during the crisis was allowed to expire on Friday.

The Fed in September 2008 allowed a blanket exception to the 23A provision of the Federal Reserve Act, which bars several affiliate transactions, to support the then-struggling tri-party repo market. It extended the waiver in January.

Since then, "the functioning of the tri-party repo market has improved considerably," the Fed said in a press release on Friday.

As financial markets improve, the Fed has begun pulling back the extraordinary support it provided to institutions during the height of the financial crisis. Many of its liquidity facilities, including its commercial paper purchase program and primary dealer credit facility, are slated to expire in February.

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